Europe 2014 sales rise on low-cost brands shift

European car sales in 2014 rose for the first time in seven years, thanks to incentives, tax breaks and a consumer shift to cheaper brands such as Dacia and Skoda.

Registrations in the EU and EFTA markets rose 5 percent to 13 million cars last year, industry association ACEA, said today in a statement.

The sales gains were primarily driven by discounting, state-backed incentives and fleet sales, rather than a genuine recovery of consumer confidence, analysts said.

Renault group sold 13 percent more cars in Europe in 2014 as the Duster SUV and Sandero hatchback helped Dacia boost registrations 23 percent and a new version of the Captur crossover led to 9 percent growth at the namesake brand.

European sales at Volkswagen, the region's biggest carmaker, gained 7 percent last year, with Skoda's Rapid sedan and wagon and Yeti SUV and a revamped Leon vehicle line at Seat boosting demand at both nameplates by 14 percent. The main VW brand sold 4 percent more cars, while Audi reported a 5 percent increase.

General Motors Co.'s European brands Opel and Vauxhall sold 7 percent more cars in the region, helped by the Adam minicar and Mokka subcompact SUV. Group registrations fell 5 percent as GM withdrew the Chevrolet nameplate from the market. Ford Motor's volume gained 5 percent.

Sales at Daimler were up 4 percent as a 6 percent rise in Mercedes-Benz cars offset a 15 drop at Smart.

European group sales at BMW increased 5 percent. The namesake brand, the world's largest luxury-car manufacturer, won 6 percent more buyers as it added the 4-series coupe, i8 plug-in hybrid sports car and van-like 2 Series Active Tourer to its line-up. The Mini division, which offered an updated hatchback toward the end of the year, posted a 2 percent increase.

BMW passes Fiat

BMW ranked sixth in industrywide deliveries last year in Europe to remain ahead of Fiat Chrysler, the company created from the merger of Italian manufacturer Fiat and U.S. auto producer Chrysler.

In addition to Renault, carmakers posting European sales gains exceeding 10 percent last year included Japanese manufacturers Nissan, Mazda and Mitsubishi, as well as Swedish producer Volvo.

Jaguar Land Rover, which is undergoing a revival, boosted sales by 6 percent.

Download PDF, above right, for European sales for December and 2014 by automaker, brand and market.

December sales rose 5 percent from a year earlier to 997,238 vehicles, ACEA said. December was the 16th consecutive month of growth, the longest stretch of gains since the association began compiling registration figures in 1990.

Discounting

Amid signs that economic expansion in euro countries was stalling, automakers widened price cuts in the final months last year to stimulate demand. "Not since the year 2000 have so few cars been bought by private individuals," Peter Fuss, an automotive analyst at EY said in a note today, referring to the fact that corporate and commercial purchases made up a large chunk of the sales.

The main drivers for last year's gains were "high discounts, cheap financing, government-subsidized schemes for buying new cars and a number of new models," Fuss said.

IHS Automotive analyst Carlos Da Silva said sales growth was helped by improvements in smaller markets such as Greece, Ireland, Portugal and many eastern Europe countries where customers needed to replace their cars regardless of economic conditions.

He said "disguised" sales practices by automakers were on the rise. These include registrations to rental businesses, by dealerships and self-registrations, he said. "The foundations for a flourishing car market are yet to be built," Da Silva said in an emailed statement.

All five of Europe's largest auto markets expanded last year, with increases of 18 percent in Spain, 9 percent in the UK, 4 percent in Italy, 3 percent in Germany and 0.3 percent in France. In Spain, the government has repeatedly extended an incentive scheme, known as Plan PIVE, which offers price cuts on new low-emission vehicles.

'Modest' 2015 rebound

The gradual revival from a two-decade low is set to continue this year as buyers replace aging vehicles.

The German carmakers association VDA expects western European sales gains in 2015 to slow by half to 2 percent as Germany, France and Italy are set for only modest increases and the UK's high growth slows.

Renault CEO Carlos Ghosn said in December that Europe's car market this year may be "volatile," with growth rates hinging on economic and monetary policies.

IHS Automotive forecasts Europewide sales to grow by 2.5 percent this year. The region will not return to pre-crisis levels before 2020, it said.